Nova Scotia's Credit Rating Reaffirmed, Outlook Changed

The Canadian Bond Rating Service has reaffirmed Nova Scotia's credit rating. However, the report released today changes the province's long-term borrowing outlook from stable to negative.

Finance Minister Neil LeBlanc said the move will likely be temporary.

"The Canadian Bond Rating Service has clearly indicated that we will keep our credit rating and return to a stable outlook once we deliver on our commitments," said Mr. LeBlanc. "We expect the next budget will demonstrate how serious we are in gaining true financial balance to all Nova Scotians, as well as the investment community."

The minister also said the rating outlook serves as a warning that there will be real financial consequences for the province if the deficit is not eliminated.

"The Canadian Bond Rating Service said a failure to meet our objectives could result in a rating downgrade. Such a move would automatically made it more difficult and more expensive for us to refinance more than $10 billion worth of debt."

Debt-servicing costs currently take up more than 17 cents of every dollar of revenues taken in by the province. Higher interest rates would either cause a redirection of funding from other government program expenditures or increase the deficit, which puts further pressure on the province's credit.

The Canadian Bond Rating Service report continues the A-minus rating for Nova Scotia Long-Term Debt and the A-1 rating for Short-Term Debt. However, the outlook on the Long-Term Debt has been changed from stable to negative.

"Maintenance of the province of Nova Scotia's current rating, and a return to a stable outlook, is predicated upon the government's ability to improve the province's fiscal position and reverse the negative trend that could lead to a rating downgrade," the report said.